Benefits of Leasing

• No large cash outlay – reserve banking facilities for other business needs
• Fixed monthly repayments – allows you to forecast and budget effectively
• Tax efficient – the cost of leasing is deductible as a business expense, reducing overall tax bill
• More attractive balance sheet – lease repayments are viewed as a business expense opposed to long-term debt.
• No penalties for early settlement – in fact a rebate is normally credited to your account!

Tax Benefits Explained

Leasing converts a large capital expenditure into small monthly or quarterly payments. Hence the company has the profit-making equipment immediately and keeps their cash reserve available. Rather than investing the precious cash reserves in depreciating assets, the company can use them to help increase profits. Many businesses are leasing assets opposed to buying outright as a method to reduce their overall tax bill. Lease rental is 100% tax deductible – all repayments made are written off against the company’s tax bill. For any profit-making business, this means a substantial saving in the real cost of acquiring equipment by lease rental. This could mean a saving of between 20-40% of the lease payments, depending on the rate of tax you pay. Payments on qualifying leases are written off as direct operating expenses, rather than a debt or outstanding liability, thus reducing short term taxable income. Any capital allowances are passed on to you, and lease payments can be offset against taxable profits. VAT can also be reclaimed on monthly payments. This status as a “lease” as opposed to a “liability” on a company’s balance sheet is something the banks like to see, which is why an operating lease can be attractive. For this reason, leasing is often referred to as ‘off balance sheet’ financing –a tremendous advantage to both large and small businesses.

Updating Equipment

The business world today is changing rapidly because of the rate at which innovation is taking place. New machines are developed all the time to cater for the new demands in the market. As a business owner, it might be difficult and expensive to upgrade outdated machines with your strained capital. Leasing services help your business to upgrade outdated equipment without purchasing new ones. Leasing equipment can also help you to test new equipment in the market.

Saving You Money

Capital is a valuable asset itself in a business. By using asset finance, you can acquire the assets you need, achieve potential tax incentives and have little impact on cash flow as well as accelerating the return on investment quickly. Asset finance allows you to hold onto valuable capital and invest it in other areas of your business.

Making Budgeting Easier

Leasing allows business owners to acquire equipment instantly without necessarily spending a lot of money. In most cases, a lease is based on monthly expenses which do not change. This helps business owners to forecast expenses and budget well. Some of the benefits you will enjoy by leasing include a tailored finance plan, instead of all up front, allowing you to spread costs over monthly payments. This is good for customer cash flow. Customers also enjoy the tax benefits of buying software, depreciation and inflation benefits.

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